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What Are the Terms of Oncor’s Ring-Fence?

What Are the Terms of Oncor’s Ring-Fence?

The terms of Oncor’s ring-fence are set forth in Oncor’s limited liability company agreement. The ring-fence comprises, but is not limited to, the following requirements:

  • Oncor must maintain a board of directors that (1) does not include any members from the boards of directors of TXU Energy Retail or Luminant (both Energy Future Holdings Corp. (EFH) subsidiaries) and (2) consists of a majority of directors that qualify as independent directors under the standards of the New York Stock Exchange.
  • Oncor’s board of directors shall have the sole right to determine dividends and cannot be overruled by the board of EFH or any of its non-ring-fenced subsidiaries on dividend policy, debt issuance, capital expenditures, management and service fees and appointment/removal of board members.
  • Oncor will not enter into any inter-company debt transactions with EFH.
  • Oncor will not share any credit facilities with an unregulated affiliate, EFH or any EFH affiliates.
  • Oncor will not seek to recover from its customers any costs incurred as a result of a bankruptcy of TXU Energy Retail, EFH or EFH’s affiliates.
  • Oncor will not lend money to or borrow money from EFH or any of its affiliates.
  • Oncor, EFH, and EFH’s affiliates will provide notice of their corporate separateness to all lenders.
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